PREPLANNING TOOLS

As everyone is aware, the mantra of Parent Your Parents is two-fold – DO NOT EXPLOIT OUR SENIORS and PREPLAN! Today I want to give you some preplanning tools to think about. l

First thing to think about is IRAs, Savings Account, Annuities – do they have a Transfer on Death (TOD) form attached to them? A transfer on death means that should you or a loved one die, the financial instrument is immediately transferred to whoever is on that form. I have some clients with ten people on a TOD, others with institutions as recipients and others with their spouse. I always recommend at least two beneficiaries, in case one is no longer living or, if it’s an institution, no longer viable. The transfer is immediate and creditors cannot come after the new beneficiaries. Most importantly, it avoids probate – a long and expensive process in Florida.

Second, any bank accounts you have will need at least a second signature or a Pay on Death form. If it’s a joint account add a child or a trusted friend. This allows your bills to be paid until the estate is settled.

Your home is probably the largest asset in your financial portfolio. If you have more than one home, then I am going to recommend a trust . . . more on that later. If you have a single home and plan to live there for the rest of your life, I recommend a Lady Bird Deed. This Deed is an enhanced life estate deed. You and your spouse own your home until both are deceased. When that happens, the house will go to the person, people or entities you have as your “remaindermen.” Just like the Transfer on Death, it will immediately transfer to the beneficiaries thereby avoiding probate. Here’s the beauty of this Deed, it takes away none of your power as an owner. You can sell, mortgage, rent or change beneficiaries and it’s no one’s business but your own.

Revocable Trusts or Living Trusts, are the best estate planning tool for multiple homes, different financial instruments, including insurance policies and valuable art and jewelry. Here’s what I have found with trusts I’ve redone for clients – the document was there but they weren’t financed. The bottom line, a trust is simply a document unless your home and financial instruments are retitled in the name of the trust. Annuities and IRA’s are not eligible for trusts as they are a tax deferred instrument, but everything else is and should be placed in it – including “all farm equipment” if you own it! Within the trust you will have a will (Pour Over Will) which can capture all the small items that might have been forgotten. The Pour Over Will simply states that everything goes to the trust.

There are irrevocable trusts but I steer clear of them. They are for the very wealthy and you need a specialized Attorney – I prefer the CPA Attorneys. Irrevocable trusts are a great scam by lawyers for unsuspecting seniors because they can create a fee by appointing themselves the Trust Protector(read my Senior Exploitation article). But the irrevocable trust takes away all your power– ALL OF IT. Think very, very carefully when advised to take this route.

These are just a few suggestions and something to think about – whether for yourselves or loved ones. The only reason to do this now is to relax and enjoy family, friends and life.